Among the millionaire types profiled in Part I, what are some of the occupational groups that tend to have higher wealth indices than the norm? Some of these include: self-employed business owners (non-retail); executives of privately held corporations (see: The Millionaire Next Door); educators (and those married to an educator, see Stop Acting Rich, pp. 23-24); engineers (see Stop Acting Rich, pp. 186-190); supermarket store managers; discount store managers; mathematicians; scientists; regional planners; writers; actuaries; property managers; farmers, and farm managers. Those with lower indices tend to be highly compensated attorneys, managers of public corporations, physicians and marketers of investment products and services.
What are some of the habitual differences that distinguish millionaires who are (balance sheet affluent) BAs from those who are (income statement affluent) IAs?
§ BAs are more than three times as likely as IAs to say that their favorite brand of suit is JCPenney private label, Joseph A. Banks, Macy’s, Menswear Outlet, or Sears private label. IAs favor Brooks Brothers, Hickey Freeman, Armani, Joseph Aboud, Nordstrom’s private label, and Polo.
§ BAs are significantly more likely than IAs to purchase apparel (not just suits) from Kohl’s, Marshall’s, Ross, Sears, Target, and Wal-Mart. IAs are three times more likely than BAs to patronize upscale apparel retailers such as Brooks Brothers, Neiman Marcus, Nordstrom’s, and Saks Fifth Avenue.
§ Most of BAs wear a watch that cost under $200. In contrast, most IAs wear an expensive prestige make of watch such as Rolex, Omega, Breitling, Cartier, and Tag Heuer. Also, most of IAs own multiples of these prestige brands.
§ Does your liquor cabinet contain a variety of premium and super premium brands of distilled beverages? If so, shake hands with a typical member of the IA group. You have something in common. BAs, on the other hand, are significantly more likely to purchase middle of the road brands of spirits. More significantly, IAs have many more bottles (three fold) in their home inventory.
§ Over the past ten years, what make of motor vehicle has been acquired more than any other by each group? IAs like Mercedes Benz, ranked first, followed closely by Lexus while the favorite among BAs was Ford followed by Toyota. What about the most popular make in terms of the most recently acquired motor vehicle? Lexus was number one among the IAs; Toyota ranked first among the BAs. Some millionaires, especially those who are most productive in converting income into wealth, drive well below their means.
What about income tax differences, ah, rendering unto Caesar? How much more difficult do you think it would be for you to become wealthy and at the same time support your family plus one other? Think of the one other as the typical BA unit. In a way, that is exactly what the IAs do. The average IA paid more in income tax than the typical BA generated in income during a year period — $95,847 versus $89,167. Overall, IAs pay nearly six times more in tax than the BAs. IAs pay the equivalent of about 10 percent of their wealth each year in tax. BAs pay less than 2 percent. The large tax burden associated with being an IA is reflected in their less than stellar wealth index.
This situation will worsen given federal and state tax increases now facing high income earners. The road to becoming rich via the IA method is lined with income tax tolls and consumption inspired road blocks and detours. If you are determined to hyper spend like most of IAs, a high income is required to buy prestige consumer goods. So is paying high income taxes (to say nothing of sales taxes on the goods purchased).